Market Analysis

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce near the $2,300 mark, oscillating within a narrow range during the early European session on Wednesday. The precious metal remains confined within a familiar trading range that has persisted for the past week and a half as traders await clarity on the Federal Reserve's (Fed) timing for interest rate cuts before making fresh directional bets.

The US central bank adopted a more hawkish stance at the conclusion of the June policy meeting, forecasting only one rate cut this year. However, the markets are still anticipating the possibility of two rate cuts in 2024 amid signs of easing inflation in the US. Additionally, weaker US Retail Sales data released on Tuesday indicated signs of exhaustion among US consumers, increasing bets for a first Fed rate cut in September and another in December.

Technical Analysis: Gold Price Consolidates Below 50-Day SMA, $2,300 Mark Crucial for Bullish Traders

From a technical perspective, bulls need to wait for sustained strength beyond the 50-day Simple Moving Average (SMA) support-turned-resistance, currently near the $2,344-2,345 region, before placing new bets. A subsequent move higher could lift the Gold price past the $2,360-2,362 supply zone, towards the $2,387-2,388 intermediate hurdle, and ultimately to the $2,400 mark. Sustained strength beyond this point would negate any near-term negative outlook and enable XAU/USD to aim for a retest of the all-time peak around the $2,450 area reached in May.

Conversely, the $2,300 mark might continue to protect the immediate downside ahead of the $2,285 horizontal support. A decisive break below this level could pave the way for a resumption of the recent pullback from the record high, dragging the Gold price towards the next relevant support near the $2,254-2,253 region. The downward trajectory could extend further towards the $2,225-2,220 support before the commodity eventually drops to the $2,200 round-figure mark.

Paraphrasing text from "FX Street" all rights reserved by the original author.